Price Dynamics in the US Market for Apparel Imports: Impact of Quota Elimination under the Agreement on Textiles and Clothing and Safeguard Restrictions on the People's Republic of China

William James () and Juan Paolo Hernando
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William James: Asian Development Bank
Juan Paolo Hernando: Asian Development Bank

No 114, ADB Economics Working Paper Series from Asian Development Bank

Abstract: This paper evaluates the impact of the removal of quotas on unit prices of clothing imports from various suppliers into the second largest global market for clothing imports, the United States (US). New quota restrictions over 26 categories of clothing were introduced on 1 January 2006 and will be in place through 31 December 2008. The paper examines the impact of these new restrictions on price movements in 2006 and the first three quarters of 2007. The dynamics of change in unit prices for 26 major groups of suppliers in the US market are indicative of the adverse effects that quantitative restrictions have on US consumers. However, the restrictions have benefited other Asian clothing suppliers. The paper also examines the strategic response to elimination of quotas under the Agreement on Textiles and Clothing by the US using preferential trade agreements to carve out a captive market for US textile intermediate products through large preferential margins in applied tariffs and rules of origin. The outlook for future price developments is assessed and conclusions regarding options for developing Asian suppliers to maintain their ability to compete in the US market are briefly considered.

Keywords: clothing imports; quotas; strategic response; textile intermediate products; United States (search for similar items in EconPapers)
JEL-codes: F13 F14 F53 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2008-05-01
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